Cops hit a wall as fraudsters stash funds in mobile wallets

Mobile service providers, e-commerce companies and banks seem to be on a spree to offer mobile and e-wallets for faster and easier financial transactions but fraudsters seem to have found the safest getaway in those apps.TNN | June 28, 2016, 15:13 IST

Kolkata: Mobile service providers, e-commerce companies and banks seem to be on a spree to offer mobile and e-wallets for faster and easier financial transactions but fraudsters seem to have found the safest getaway in those apps. Shunning the more traditional bank accounts, the se tech-savvy tricksters were now stashing their stolen money in mobile wallets, taking advantage of the loopholes in the slack security cover that provides anonymity to the user.

According to investigators, they could still zero in on the funds trail and the fraudster if e-wallets linked to bank accounts were "broken into" but it was the mobile wallets that were the problem area. "A mobile service provider offers such a facility against a cellphone connection. It isn't difficult to obtain a mobile connection these days and swindlers invariably use forged documents. Unlike the strict verifications carried out by banks, mobile service providers usually rely on tele-verification, which is basically calling up a number provided by an applicant for a cross-check. A trickster can easily manipulate the process to get a number," said a senior police officer probing bank frauds. "The CAF (Customer Acquisition Form) required to obtain sim cards are flooded with fictitious photos and fake identity documents, leaving us with little chance to trace a target," an officer said. "Usually, the accused does not use the number to call anyone other than his victim. So no third party will be available in the call record."

Ditto is the problem with e-commerce sites. "The more frequently used e-commerce sites for mobile wallets are registered outside the country. Requests for login details and IP addresses-key requirements for any investigator-have to be sent to the off-shore companies. Their response is slow. At a time when money is being siphoned off quickly, such delays are detrimental to probe," an officer pointed out.

Financial fraudsters, who are invariably tech-savvy, are always the first one to detect a loophole in the system. For example, in March, the Kolkata Police arrested five engineering students for robbing a bank of crores through mobile wallets over four months. A private sector bank, which had opened its wallet transaction operations barely three months earlier, was not even aware of the flaw: if a customer tried to pay another wallet-holder-and the latter had his internet connection switched off-the one transferring the amount did not debit money from his/her wallet. Instead, the bank ended up paying. Taking advantage of the fault, the accused siphoned Rs 8.6 crore off the bank.

Beneficiary accounts, in cop parlance, are critical to a financial probe. With RBI putting down strict rules to open a bank account, fraudsters looked for a chink in the armour. "We have written to RBI, mobile service providers and all stakeholders to plug the holes," an officer said.